The COVID-19 pandemic and the real estate market in the Czech Republic

Abstract

This paper aims to identify the critical factors that influence price changes in the real estate market before, during, and after the outbreak of the COVID-19 pandemic for the period 2016-2022. The first part of the contribution deals with the literature search that examines the issue in different parts of the world. Furthermore, methods of solving the problem were chosen. Time series and correlation analysis methods were chosen for this work. The data used was selected from the areas of developments in real housing price indices, developments in real property prices, from the real index, the index of the growth rate of completed apartments in Prague, real estate price indices for territorial comparison, residential construction of family and apartment buildings, construction production, unemployment rate, rate inflation, GDP development, interest rate, and construction index. The results showed that the correlation coefficient between inflation and the price of real estate in the years 2019-2022 was around 0.8. Furthermore, the correlation coefficient between GDP and the price of sold apartments in the same period was 0.63. The relationship between GDP and construction production also plays a significant role, where the correlation coefficient was 0.69. The correlation coefficient between construction output and the interest rate was 0.4. If you can focus on the real estate market as it grew, so did the asking prices. In the first quarter before the outbreak of the COVID-19 pandemic, the average selling price was around CZK 57,900 per m2. At the end of the last quarter of 2022, prices reached an average of CZK 93,300 per m2.